Exam 9: Fixed Assets and Intangible Assets

The amount of depreciation expense for the first full year of use of a fixed asset costing $95,000, with an estimated residual value of $5,000 and a useful life of 5 years, is $19,000 by the straight-line method.

Fixed assets are ordinarily presented on the balance sheet

Losses on the discarding of fixed assets are reported in the income statement.

The process of transferring the cost of metal ores and other minerals removed from the earth to an expense account is called

Golden Sales has bought $135,000 in fixed assets on January 1st associated with sales equipment. The residual value of these assets is estimated at $10,000 at the end of their 4-year service life. Golden Sales managers want to evaluate the options of depreciation. a) Compute the annual straight-line depreciation and provide the sample depreciation journal entry to be posted at the end of each of the years. b) Write the journal entries for each year of the service life for these assets using the double-declining balance method.

A number of major structural repairs completed at the beginning of the current fiscal year at a cost of $1,000,000 are expected to extend the life of a building 10 years beyond the original estimate. The original cost of the building was $6,552,000, and it has been depreciated by the straight-line method for 25 years. Estimated residual value is negligible and has been ignored. The related accumulated depreciation account after the depreciation adjustment at the end of the preceding fiscal year is $4,550,000. a) What has the amount of annual depreciation been in past years? b) What was the original life estimate of the building? c) To what account should the $1,000,000 be debited? d) What is the book value of the building after the extraordinary repairs have been made? e) What is the expected remaining life of the building after the extraordinary repairs have been made? f) What is the amount of straight-line depreciation for the current year, assuming that the repairs were completed at the very beginning of the current year? Round to the nearest dollar.

Newport Company has sales of $2,025,000 for the current year. The book value of its fixed assets at the beginning of the year was $550,000 and at the end of the year was $800,000. The fixed asset turnover ratio for Newport is

Classify each of the following as: -Adding refrigerant to an air conditioning system

The most widely used depreciation method is

The process of transferring the cost of an asset to an expense account is called all of the following except

The calculation for annual depreciation using the units-of-output method is

Expenditures that increase operating efficiency or capacity for the remaining useful life of a fixed asset are called capital expenditures.

Classify each of the following costs associated with long-lived assets as one of the following: -Landscaping at new business location

A fixed asset with a cost of $41,000 and accumulated depreciation of $36,500 is traded for a similar asset priced at $60,000. Assuming a trade-in allowance of $3,000, the recognized loss on the trade is

When old equipment is traded in for a new equipment, the difference between the list price and the trade in allowance is called boot.

Falcon Company acquired an adjacent lot to construct a new warehouse, paying $40,000 and giving a short-term note for $410,000. Legal fees paid were $13,275, delinquent taxes assessed were $14,500, and fees paid to remove an old building from the land were $15,800. Materials salvaged from the demolition of the building were sold for $6,800. A contractor was paid $890,000 to construct the new warehouse. Determine the cost of the land to be reported on the balance sheet and show your work.

All of the following are needed for the calculation of straight-line depreciation except

Financial statement data for the years ended December 31 for Parker Corporation are as follows: Current Year Prior Year Sales Fixed assets net): Beginning of the year $2,595,600 $901,070 $2,409,498 $820,000 End of the year 829,330 901,070 a) Determine the fixed asset turnover for the current and prior years. b) Does the change in fixed asset turnover from the prior year to the current year indicate a favorable or unfavorable trend?

Match the intangible assets described with their proper classification a-d). -A new kitchen gadget that can be produced by only one company

The ratio measuring the number of dollars of sales earned per dollar of fixed assets is the